# Regulations Under the Uniformed Services Employment and Reemployment Rights Act of 1994, as Amended

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A04-20844

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** September 20, 2004
- **Citation:** 69 FR 56266

## Text

DEPARTMENT OF LABOR
Veterans' Employment and Training Service
20 CFR Part 1002
[Docket No. VETS-U-04]
RIN 1293-AA09
Regulations Under the Uniformed Services Employment and Reemployment Rights Act of 1994, as Amended

AGENCY:

Veterans' Employment and Training Service, Department of Labor.

ACTION:

Proposed rules.

SUMMARY:

The Veterans' Employment and Training Service (“VETS” or “the Agency”) is issuing proposed rules that would implement the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended (USERRA). Congress enacted USERRA to protect the rights of persons who voluntarily or involuntarily leave employment positions to undertake military service. USERRA authorizes the Secretary of Labor (in consultation with the Secretary of Defense) to prescribe rules implementing the law as it applies to States, local governments, and private employers. VETS is proposing these rules under that authority in order to provide guidance to employers and employees concerning their rights and obligations under USERRA. The Agency invites written comments on these proposed rules, and any specific issues related to this proposal, from members of the public.

DATES:

Comments regarding this proposal, including comments on the information-collection determination described in Section V of the preamble (“Paperwork Reduction Act”), must be received by the Agency on or before November 19, 2004. Please see the sections below entitled
ADDRESSES
and
SUPPLEMENTARY INFORMATION
for additional information on submitting comments.

ADDRESSES:

You may submit comments, identified as “Docket No. VETS-U-04,” by any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.

Electronic mail (email): vets-public@dol.gov.
Include “Docket No. VETS-U-04” on the subject line of the message. You can attach materials that are in Microsoft Office formats such as Word, Excel, and Power Point. Attachments may also be made using Adobe Acrobat, Word Perfect, or ASCII/text documents. You cannot attach materials using executables (.exe, .com, .bat) or any encrypted zip files.

Facsimile (fax):
VETS at 202-693-4754.

Mail, Express Delivery, Hand Delivery, and Messenger Service:
Submit an original and three copies of written comments and attachments to the Office of Operations and Programs, Docket No. VETS-U-04, Room S-1316, U.S. Department of Labor, 200 Constitution Ave., NW., Washington, DC 20210; telephone (202) 693-4711. If possible, provide your written comments on a computer disc. Contact Mr. Bob Sacoman at (202) 693-4721 with any formatting questions. Normal hours of operation for the VETS Office of Operations and Programs and the Department of Labor are 8:15 a.m. to 4:45 p.m., Eastern Time, Monday through Friday (except Federal holidays).

Note that security-related problems may result in significant delays in receiving comments and other written materials by regular mail. Contact Mr. Charles Dawson, VETS Office of Operations and Programs, at (202) 693-4711 for information regarding security procedures concerning delivery of materials by express delivery, hand delivery, and messenger service.

Docket Access:
All comments and submissions will be available for inspection and copying in the VETS Office of Operations and Programs at the address above during normal hours of operation. Contact Mr. Charles Dawson, VETS Office of Operations and Programs, at (202) 693-4711 for information about access to the docket submissions. Because comments sent to the docket are available for public inspection, the Agency cautions commenters against including in their comments personal information such as social security numbers and birth dates.

FOR FURTHER INFORMATION CONTACT:

For information, contact Charles Dawson, Office of Operations and Programs, Veterans' Employment and Training Service (VETS), U.S. Department of Labor, Room S1316, 200 Constitution Ave., NW., Washington, DC 20210. Telephone: 202-693-4711 (this is not a toll-free number). Electronic mail:
dawson.charles@dol.gov.

For press inquiries, contact Michael Biddle, Office of Public Affairs, U.S. Department of Labor, Room S-1032, 200 Constitution Avenue, NW., Washington, DC 20210. Telephone: 202-693-5051 (this is not a toll-free number). Electronic mail:
biddle.michael@dol.gov.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Department of Labor proposes to issue regulations to implement the Uniformed Services Employment and Reemployment Rights Act of 1994, as amended (USERRA), 38 U.S.C. 4301-4333. Congress enacted USERRA to protect the rights of persons who voluntarily or involuntarily leave employment positions to undertake military service. Section 4331 of USERRA authorizes the Secretary of Labor (in consultation with the Secretary of Defense) to prescribe regulations implementing the law as it applies to States, local governments, and private employers. 38 U.S.C. 4331(a). The Department has consulted with the Department of Defense, and proposes these regulations under that authority in order to provide guidance to employers and employees concerning the rights and obligations of both under USERRA. The Department invites written comments on these proposed regulations from interested parties. The Department also invites public comment on specific issues.

USERRA was enacted in part to clarify prior laws relating to the reemployment rights of service members, rights that were first contained in the Selective Training and Service Act of 1940, 54 Stat. 885, 50 U.S.C. 301,
et seq.
USERRA's immediate predecessor was the Vietnam Era Veterans' Readjustment Assistance Act of 1974, 38 U.S.C. 2021-2027 (later recodified at 38 U.S.C. 4301-4307 and commonly referred to as the Veterans' Reemployment Rights Act), which was amended and recodified as USERRA.

In construing USERRA and these prior laws, courts have followed the Supreme Court's admonition that:

This legislation is to be liberally construed for the benefit of those who left private life to serve their country in its hour of great need * * * And no practice of employers or agreements between employers and unions can cut down the service adjustment benefits which Congress has secured the veteran under the Act.

See Fishgold
v.
Sullivan Drydock and Repair Corp.,
328 U.S. 275, 285 (1946), cited in
Alabama Power Co.
v.
Davis,
431 U.S. 581, 584-85 (1977);
King
v.
St. Vincent's Hosp.,
502 U.S. 215, 221 n.9 (1991). The Department intends that this interpretive maxim apply with full force and effect in construing USERRA and these proposed regulations.

This preamble also selectively refers to many other cases decided under USERRA and its predecessor statutes, to explain and illustrate the rights and benefits established under the Act. The failure to cite or refer to a particular

court decision in this preamble is not intended to indicate the Department's approval or disapproval of the reasoning or holding of that case.

II. Plain Language

The Department wrote this proposed rule in the more personal style advocated by the Presidential Memorandum on Plain Language. “Plain language” encourages the use of:

• Personal pronouns (we and you);

• Sentences in the active voice; and,

• A greater use of headings, lists, and questions.

In this proposed rule, “you,” “I,” and “my,” refers to employees because they are the primary beneficiaries of USERRA rights and benefits. The Department recognizes and appreciates the value of comments, ideas, and suggestions from members of the uniformed services, employers, industry associations, labor organizations and other parties who have an interest in uniformed service members' and veterans' employment and reemployment benefits. The Department would appreciate comments and suggestions from all parties on this proposed rule and on language that would improve the clarity of this regulation.

III. Electronic Access and Filing

You may submit comments and data by sending electronic mail (E-mail) to:
vets-public@dol.gov.
Include “Docket No. VETS-U-04” on the subject line of the message. You can attach materials that are in Microsoft Office formats such as Word, Excel, and Power Point. Attachments may also be made using Adobe Acrobat, Word Perfect, or ASCII/text documents. You cannot attach materials using executables (.exe, .com, .bat) or any encrypted zip files.

IV. Summary of Proposed Regulations

Subpart A—Introduction to the Regulations Under the Uniformed Services Employment and Reemployment Rights Act of 1994

General Provisions

Proposed sections 1002.1 through 1002.7 describe the regulation's purpose, scope, and background, as well as the sense of the Congress in enacting USERRA. Proposed Section 1002.1 sets out the purpose of these regulations.
See
38 U.S.C. 4301. Proposed Sections 1002.2 through 1002.4 provide additional background on USERRA, its effective date, and its purposes. Proposed section 1002.5 defines the important terms used in the regulation.
See
38 U.S.C. 4303. Proposed sections 1002.6 and 1002.7 describe the general coverage of the rule, its applicability and its relationship to other laws, contracts, agreements, and workplace policies and practices.
See
38 U.S.C. 4302. The Federal Office of Personnel Management has issued a separate body of regulations that govern the USERRA rights of Federal employees.
See
5 CFR part 353.

Subpart B—Anti-Discrimination and Anti-Retaliation

Protection From Employer Discrimination and Retaliation

USERRA prohibits an employer from engaging in acts of discrimination against past and present members of the uniformed services, as well as applicants to the uniformed services. 38 U.S.C. 4311(a). The anti-discrimination prohibition applies to both employers and potential employers. No employer may deny a person initial employment, reemployment, retention in employment, promotion, or any benefit of employment based on the person's membership, application for membership, performance of service, application to perform service, or obligation for service in the uniformed services. USERRA also protects any person who participates in an action to protect past, present or future members of the uniformed services in the exercise of their rights under the Act. The Act prohibits any employer from discriminating or taking reprisals against any person who acts to enforce rights under the Act; testifies in or assists a statutory investigation; or, exercises any right under the statute pertaining to any person. 38 U.S.C. 4311(b). A person is protected against discrimination and reprisal regardless whether he or she has served in the military.

Proposed sections 1002.18, 1002.19 and 1002.20 implement the protections of section 4311(a) and (b). Proposed section 1002.21 makes clear that the prohibition on discrimination applies to any employment position, regardless of its duration, including a position of employment that is for a brief, non-recurrent period, and for which there is no reasonable expectation that the employment position will continue indefinitely or for a significant period. Proposed section 1002.22 explains who has the burden of proving that certain action violates the statute. The Department requests comment on the application of the anti-discrimination provisions of the Act to potential employers.

In order to establish a case of employer discrimination, the person's membership, application for membership, performance of service, application for service, or obligation for service in the uniformed services must be a “motivating factor” in the employer's actions or conduct. 38 U.S.C. 4311(c)(1). Section 4311(c) sets out an evidentiary scheme like that followed by the National Labor Relations Board in interpreting the National Labor Relations Act, as explained by the United States Supreme Court in
NLRB
v.
Transportation Management Corp.,
462 U.S. 393, 401 (1983).
See Gummo
v.
Village of Depew, NY,
75 F.3d 98, 106 (2d Cir. 1996) (
citing
S.Rep. No. 158, 103d Cong., 2d Sess. 45 (1993), and H.R. Rep. No. 65, 103d Cong., 2d Sess. 18, 24 (1993). The initial burden of proving discrimination or retaliation rests with the person alleging discrimination (the claimant). The burden then shifts to the employer to prove that it would have taken the action anyway, without regard to the employee's protected status or activity. If the employer successfully establishes such an affirmative defense, the claimant can prevail only by showing that the employer would not have taken the action, but for the claimant's protected activity.

A person alleging discrimination under USERRA must first establish that his or her protected status as a past, present or future service member was a motivating factor in the adverse employment action.
See Robinson
v.
Morris Moore Chevrolet-Buick, Inc.,
974 F. Supp. 571 (E.D. Tex. 1997). The claimant alleging discrimination must prove the elements of a violation—
i.e.
, membership in a protected class (such as past, present or future affiliation with the uniformed services); an adverse employment action by the employer or prospective employer; and a causal relationship between the claimant's protected status and the adverse employment action (the “motivating factor”). To meet this burden, a claimant need not show that his or her protected status was the sole cause of the employment action; the person's status need be only one of the factors that “a truthful employer would list if asked for the reasons for its decision.”
Kelley
v.
Maine Eye Care Associates,
P.A, 37 F. Supp.2d 47, 54 (D. Me. 1999);
see Robinson,
974 F. Supp. at 575 (citing
Price Waterhouse
v.
Hopkins,
490 U.S. 228, 250 (1989) (addressing Title VII gender discrimination claim and related defense)). “Military status is a motivating factor if the defendant relied on, took into account, considered, or conditioned its decision on that consideration.”
Fink
v.
City of New York,
129 F.Supp.2d 511, 520 (E.D.N.Y. 2001),
citing Robinson,
974 F.Supp. at

576. The employee is not required to provide direct proof of employer animus at this stage of the proceeding; intent to discriminate or retaliate may be established through circumstantial evidence.
See Desert Palace, Inc.
v.
Costa,
539 U.S. 90 (2003);
United States Postal Service Bd. of Governors
v.
Aikens,
460 U.S. 711, 714 (1983). If the employer fails to counter this evidence, the claimant's proof establishes that the adverse employment action was more likely than not motivated by unlawful reasons.

After the employee establishes the elements of a violation, the employer may avoid liability by proving that the claimant's military status was not a motivating factor in the adverse employment action.
See Gummo,
75 F.3d at 106. The employer must demonstrate that it would have taken the same adverse action for legitimate reasons regardless of the claimant's protected status. If the employer satisfies this burden of proof, then the employee can prevail only by demonstrating that the employer would not have taken the action but for the prohibited motive. This burden may be satisfied either directly by proving that a discriminatory reason more likely motivated the employer, or indirectly by persuading the adjudicator that the employer's explanation is not credible.
Aikens,
460 U.S. at 716.

Section 4311(c)(2) provides the same evidentiary framework for adjudicating allegations of reprisal against any person (including individuals unaffiliated with the military) for engaging in activities to enforce a protected right; providing testimony or statements in a USERRA proceeding; assisting or participating in a USERRA investigation; or exercising a right provided by the statute. 38 U.S.C. 4311(c)(2). Proposed section 1002.19 addresses the elements of a case of retaliation.

Subpart C—Eligibility for Reemployment

General Eligibility Requirements for Reemployment

USERRA requires that the service member meet five general criteria in order to establish eligibility for reemployment:

(1) That the service member be absent from a position of civilian employment by reason of service in the uniformed services;

(2) That the service member's employer be given advance notice of the service;

(3) That the service member have five years or less of cumulative service in the uniformed services with respect to a position of employment with a particular employer;

(4) That the service member return to work or apply for reemployment in a timely manner after conclusion of service; and,

(5) That the service member not have been separated from service with a disqualifying discharge or under other than honorable conditions.

Proposed section 1002.32 sets out these general eligibility requirements. Proposed sections 1002.34-.74 explain the “absent from a position of civilian service” requirement, sections 1002.85-.88 explain the “advance notice” requirement, sections 1002.99-.104 explain the “five years or less of cumulative service” requirement, sections 1002.115-.123 explain the “return to work or apply for reemployment” requirement, and sections 1002.134-.138 explain the “no disqualifying discharge” requirement.

A person who meets these eligibility criteria, which are contained in 38 U.S.C. 4312(a)-(c) and 4304, is entitled to be reemployed in the position described in 38 U.S.C. 4313, unless the employer can establish one of the three affirmative defenses contained in 38 U.S.C. 4312(d).

There has been some disagreement in the courts over the appropriate burden of proof in cases brought under 38 U.S.C. 4312, the provision in USERRA establishing the reemployment rights of persons who serve in the uniformed services. One court has interpreted that provision to be “a subsection of § 4311 [the anti-discrimination and anti-retaliation provision].”
Curby
v.
Archon,
216 F.3d 549, 556 (6th Cir. 2000). Other courts have interpreted section 4312 to establish a statutory protection distinct from section 4311, creating an entitlement to re-employment for qualifying service members rather than a protection against discrimination.
Wrigglesworth
v.
Brumbaugh,
121 F. Supp.2d 1126, 1134 (W.D. Mich. 2000) (stating that requirements of section 4311 do not apply to section 4312).
Brumbaugh
relies in part on legislative history and the Department's interpretation of USERRA.
Id.
at 1137. Another district court supports the
Brumbaugh
decision and characterizes the contrary view in
Curby
as
dicta. Jordan
v.
Air Products and Chem.,
225 F. Supp.2d 1206, 1209 (C.D. Ca. 2002).

The Department agrees with the district court decisions in
Brumbaugh
and
Jordan
that sections 4311 and 4312 of USERRA are separate and distinct. Proposed section 1002.33 provides that a person seeking relief under section 4312 need not meet the additional burden of proof requirements for discrimination cases brought under section 4311. The Department disagrees with the decision in
Curby
v.
Archon
discussed above, insofar as it interprets USERRA to the contrary. The Department invites comments regarding the proper interpretation of the statute regarding the burden of proof for relief under section 4312.

Coverage of Employers and Positions

Proposed sections 1002.34 through 1002.44 list the employers and employment positions that are covered by USERRA. Proposed section 1002.33 provides that the Act's coverage extends to virtually all employers in the United States; the statute contains no threshold or minimum size to limit its reach. The remaining proposed provisions address various aspects of the employment relationship subject to the Act. Proposed section 1002.35 defines the term “successor in interest.” Proposed section 1002.37 addresses the situation in which more than one employer may be responsible for one employee. Proposed sections 1002.38 and 1002.42 discuss hiring halls, layoffs and recalls. Proposed section 1002.39 covers States and other political subdivisions of the United States as employers.

Proposed section 1002.40 makes clear that USERRA makes it unlawful for any employer to deny employment to a prospective employee on the basis of his or her membership, application for membership, performance of service, application to perform service, or obligation for service in the uniformed services, or on the basis of his or her exercise of any right guaranteed under the Act. Temporary, part-time, probationary, and seasonal employment positions are also covered by USERRA. Proposed section 1002.41 addresses the limited exception for positions that are for a brief, non-recurrent period and for which the employee has no reasonable expectation of continued employment indefinitely or for a significant period. Proposed section 1002.42 explains that USERRA covers employees on strike, layoff, or leave of absence. Proposed section 1002.43 makes clear that persons occupying professional, executive and managerial positions also are entitled to USERRA rights and benefits. Proposed section 1002.44 addresses the distinction between an independent contractor and an employee under USERRA.

Coverage of Service in the Uniformed Service

Proposed sections 1002.54 through 1002.62 explain the term “service in the

uniformed services,” list the various types of uniformed services, and clarify that both voluntary and involuntary duty are covered under USERRA. Proposed section 1002.54 provides that “service in the uniformed services” includes a period for which a person is absent from a position of employment for the purpose of an examination to determine his or her fitness to perform duty in the uniformed services. Proposed sections 1002.55 and 1002.56 provide that service under certain authorities for funeral honors duty or as a disaster-response appointee also constitute service in the uniformed services. Proposed section 1002.57 clarifies when service in the National Guard is covered by USERRA, and proposed section 1002.58 addresses service in the commissioned corps of the Public Health Service, a division of the Department of Health and Human Services. Proposed section 1002.59 recognizes coverage for persons designated by the President in time of war or national emergency. Proposed sections 1002.60, 1002.61, and 1002.62 address the coverage of a cadet or midshipman attending a service academy, and members of the Reserve Officers Training Corps, Commissioned Corps of the National Oceanic and Atmospheric Administration, Civil Air Patrol, and Coast Guard Auxiliary.

Absence From a Position of Employment Necessitated by Reason of Service in the Uniformed Services

Proposed section 1002.73 addresses the issue of the employee's reason for leaving employment as it bears on his or her reemployment rights. Section 4312(a) of the Act states that “any person whose absence from a position of employment is necessitated by reason of service in the uniformed services” is entitled to the reemployment rights and benefits of USERRA, assuming the Act's eligibility requirements are met. Military service need not be the only reason the employee leaves, provided such service is at least one of the reasons.
See
H.R. Rep. No. 103-65, Part I, at 25 (1993).

USERRA does not impose a limit on the amount of time that may elapse between the date the employee leaves his or her position and the date he or she actually enters the service. Proposed section 1002.74 recognizes that no such limit is warranted. A person entering military service generally needs a period of time to organize his or her personal affairs, travel safely to the site where the service is to be performed, and arrive fit to perform service. The amount of time needed for these preparations will vary from case to case. Moreover, the actual commencement of the period of service may be delayed for reasons beyond the employee's control. If an unusual delay occurs between the time the person leaves civilian employment and the commencement of the uniformed service, the circumstances causing the delay may be relevant to establish that the person's absence from civilian employment was “necessitated by reason of service in the uniformed services.”
See Lapine
v.
Town of Wellesley,
304 F.3d 90 (1st Cir. 2002).

Requirement of Advance Notice

Proposed section 1002.85 explains one of the basic obligations imposed on the service member by USERRA as a prerequisite to reemployment rights: the requirement to notify the employer in advance about impending military service. 38 U.S.C. 4312(a)(1). Section 4312(a)(1) of USERRA contains three general components of adequate notice: (i) The sender of the notice; (ii) the type of notice; and (iii) the timing of notice. First, the employee must notify his or her employer that the employee will be absent from the employment position due to service in the uniformed services. An “appropriate officer” from the employee's service branch, rather than the employee, may also provide the notice to the employer. Second, the notice may be either verbal or in writing.
See
38 U.S.C. 4303(8) (defining “notice” to include both written and verbal notification). Although written notice by the employee provides evidence that can help establish the fact that notice was given, the sufficiency of verbal notice recognizes the “informality and current practice of many employment relationships[.]” S. Rep. No. 103-158, at 47 (1993). The act of notification is therefore more important than its particular form. Third, the notice should be given in advance of the employee's departure. USERRA does not establish any bright-line rule for the timeliness of advance notice, i.e., a minimum amount of time before departure by which the employee must inform the employer of his or her forthcoming service. Instead, timeliness of notice must be determined by the facts in any particular case, although the employee should make every effort to give notice of impending military service as far in advance as is reasonable under the circumstances.
See
H.R. Rep. No. 103-65, Pt. 1, at 26 (1993).

Proposed section 1002.86 implements the statutory exceptions to the requirement of advance notice of entry into the uniformed services. The statute recognizes that in rare cases it may be very difficult or impossible for an employee to give advance notice to his or her employer. To accommodate these cases, the advance notice requirement may be excused by reason of “military necessity” or circumstances that make notice to the employer “otherwise impossible or unreasonable.” 38 U.S.C. 4312(b). Section 4312(b) also provides that the uniformed services make the determination whether military necessity excuses an individual from notifying his or her employer about forthcoming military service. Any such determination is to be made according to regulations issued by the Secretary of Defense.
See
32 CFR part 104. Finally, section 4312(b) states that the “military necessity” determination is not subject to judicial review. The same finality and exemption from review, however, do not apply if the employee fails to provide notice to his or her employer because the particular circumstances allegedly make notification “impossible or unreasonable.” Whether the circumstances of the case support the employee's failure to provide advance notice of service are questions to be decided by the appropriate fact-finder.
See
S. Rep. No. 103-158, at 47 (1993).

Proposed section 1002.87 makes explicit that the employee is not required to obtain the employer's permission before departing for uniformed service in order to protect his or her reemployment rights. Imposing a prior consent requirement would improperly grant the employer veto authority over the employee's ability to perform service in the uniformed services by forcing the employee to choose between service and potential loss of his or her employment position, if consent were withheld.

Proposed section 1002.88 implements the long-standing legal principle that an employee departing for service is not required to decide at that time whether he or she intends to return to the pre-service employer upon completion of the tour of duty. Rather, the employee may defer the decision until after he or she concludes the period of service, and the employer may not press the employee for any assurances about his or her plans.
See
H.R. Rep. No. 103-65, Part I, at 26 (1993) (“One of the basic purposes of the reemployment statute is to maintain the service member's civilian job as an ‘unburned’ bridge.”) and S. Rep. No. 103-158, at 47 (1993), both of which cite
Fishgold
v.
Sullivan Drydock and Repair Corp.,
328 U.S. 275, 284 (1946).

Period of Service

USERRA provides that an individual may serve up to five years in the uniformed services, in a single period of service or in cumulative periods totaling

five years, and retain the right to reemployment by his or her pre-service employer. 38 U.S.C. 4312(c). Proposed sections 1002.99 through 1002.104 implement this statutory provision. Section 1002.99 implements the basic five-year period established by the statute. Proposed section 1002.100 provides that the five-year period includes only actual uniformed service time. Periods of time preceding or following actual service are not included even if those periods may involve absences from the employment position for reasons that are service-related, for example, travel time to and from the duty station, time to prepare personal affairs before entering the service, delays in activation, etc. Proposed section 1002.101 clarifies that the five-year period pertains only to the cumulative period of uniformed service by the employee with respect to one particular employer, and does not include periods of service during which the individual was employed by a different employer. Therefore, the employee is entitled to be absent from a particular position of employment because of service in the uniformed services for up to five years and still retain reemployment rights with respect to that employer; this period starts anew with each new employer. The regulation derives from section 4312(c)'s language tying the five-year period “to the employer relationship for which a person seeks reemployment[.]” 38 U.S.C. 4312(c). Note, however, that under these proposed regulations a hiring hall out of which an individual may work for several different employers is considered to be a single employer.
See
proposed section 1002.38.

Proposed section 1002.102 addresses periods of service undertaken prior to the enactment of USERRA, when the Veterans' Reemployment Rights Act (VRRA) was in effect. If an individual's service time counted towards the VRRA's four or five-year periods for reemployment rights, then that service also counts towards USERRA's five-year period. The regulation implements section (a)(3) of the rules governing the transition from the VRRA to USERRA, which appear in a note following 38 U.S.C. 4301. The Department invites comments as to whether this interpretation best effectuates the purpose of the Act.
See
proposed section 1002.102.

Section 4312(c) enumerates eight specific exceptions to the five-year limit on uniformed service that allow an individual to serve longer than five years while working for a single employer and retain reemployment rights under USERRA. 38 U.S.C. 4312(c)(1)-(4)(A)-(E). The exceptions involve unusual service requirements, circumstances beyond the individual's control, or service (voluntary or involuntary) under orders issued pursuant to specific statutory authority or the authority of the President, Congress or a Service Secretary. Proposed section 1002.103 implements this provision by describing each exception set out in the statute.

The regulation also recognizes a ninth exception based on equitable considerations. A service member is expected to mitigate economic damages suffered as a consequence of an employer's violation of the Act.
See Graham
v.
Hall-McMillen Co., Inc.,
925 F. Supp. 437, 446 (N.D. Miss. 1996). If an individual remains in (or returns to) the service in order to mitigate economic losses caused by an employer's unlawful refusal to reemploy that person, the additional service is not counted against the five-year limit. The Secretary seeks comments on whether an exception to the five-year limit based on the service member's mitigation of economic loss furthers the purposes of the statute.

Proposed section 1002.104 implements section 4312(h), which prohibits the denial of reemployment rights based on the “timing, frequency, and duration” of the individual's training or service, as well as the nature of that service or training. 38 U.S.C. 4312(h). A service member's reemployment rights must be recognized as long as the individual has complied with the eligibility requirements specified in the Act.
Id.
The legislative history of section 4312(h) makes clear the Congress' intent to codify the holding of the United States Supreme Court in
King
v.
St. Vincent's Hospital,
502 U.S. 215 (1991).
See
H.R. Rep. No. 103-65, Part I, at 30 (1993); S. Rep. No. 103-158, at 52 (1993). In
King,
the court held that no service limit based on a standard of reasonableness could be implied from the predecessor version of USERRA. Section 4312(h). Proposed section 1002.104 therefore prohibits applying a “reasonableness” standard in determining whether the timing, frequency, or duration of the employee's service should prejudice his or her reemployment rights. Consistent with views expressed in the House report, however, proposed section 1002.104 counsels an employer to contact the appropriate military authority to discuss its concerns over the timing, frequency, and duration of an employee's military service.

Application for Reemployment

In order to protect reemployment rights under USERRA, the returning service member must make a timely return to, or application for reinstatement in, his or her employment position after completing the tour of duty. 38 U.S.C. 4312(a)(3). Sections 4312(e) and (f) establish the required steps of the reinstatement process. 38 U.S.C. 4312(e), (f). Section 4312(e) establishes varying time periods for requesting reinstatement based on the length of the individual's military service. This provision also addresses the time periods for reporting to the employer or applying for reemployment by a person who is hospitalized for, or convalescing from, an injury or illness incurred in, or aggravated during, the performance of service. Section 4312(f) describes the documentary evidence that the service member must submit to the employer in order to establish that the service member meets the statutory requirements for reinstatement. The proposed regulations implement these documentation requirements at 1002.121 to .123.

Proposed section 1002.115 explains the three statutory time periods for making a request for reinstatement, depending on the length of the period of military service, except in the case of an employee's absence for an examination to determine fitness to perform service. The proposed regulation also specifies the actions that must be taken by the employee. Section 4312(e)(1)(A)(i) of USERRA provides that the employee reporting back to the employer following a period of service of less than 31 days must report:

(i) Not later than the beginning of the first full regularly scheduled work period on the first full calendar day following the completion of the period of service and the expiration of eight hours after a period allowing for the safe transportation of the person from the place of that service to the person's residence * * *

38 U.S.C. 4312(e)(1)(A)(i). The Department interprets this provision as requiring the employee to report at the beginning of the first full shift on the first full day following the completion of service, provided the employee has a period of eight hours to rest following safe transportation to the person's residence.
See
H.R. Rep. No. 103-65 at 29 (1993). The Department also understands the term “next” in the clause “next first full calendar day” in section 4312(e)(1)(C) to be superfluous. The Department invites comments as to whether these interpretations best effectuate the purpose of this provision.
See
proposed section 1002.115.

If it is impossible or unreasonable for the employee to report within the above time period, he or she must report to the employer as soon as possible after the expiration of the eight-hour period.

If the individual served between 31 and 180 days, he or she must make an oral or written request for reemployment no more than 14 days after completing service. If it is impossible or unreasonable for the employee to apply within 14 days through no fault of the employee, he or she must submit the application not later than the next full calendar day after it becomes possible to do so. Finally, if the individual served more than 180 days, he or she must make an oral or written request for reemployment no more than 90 days after completing service.

Proposed section 1002.116 addresses the situation where a service member is unable to meet the foregoing timeframes due to the individual's hospitalization for or convalescence from a service-related illness or injury. Such a person must comply with the notification procedures determined by the length of service, after the time period required for the person's recovery. The recovery period may not exceed two years unless circumstances beyond the individual's control make notification within the required two-year period impossible or unreasonable.

Proposed section 1002.117 covers the situation where the employee fails to report or to submit a timely application for reemployment. Such failure does not automatically divest the individual of his or her statutory reemployment rights.
See
38 U.S.C. 4312(e)(3). The employer may subject the employee to the workplace rules, policies and practices that ordinarily apply to an employee's unexcused absence from work.

Proposed sections 1002.118 through 1002.123 establish procedures for notifying the employer that the service member intends to return to work. These sections also address the requirement that the returning service member provide documentation to the employer in certain instances. The documentation provides evidence that the service member meets three of the basic requirements for reemployment: timely application for reinstatement, permissible duration of service, and appropriate type of service discharge. USERRA expressly provides that the Secretary may prescribe, by regulation, the documentation necessary to demonstrate that a service member applying for employment or reemployment meets these requirements. Proposed section 1002.120 makes clear that the service member does not forfeit reemployment rights with one employer by working for another employer after completing his or her military service, as long as the service member complies with USERRA's reinstatement procedures.

Character of Service

USERRA makes entitlement to reemployment benefits dependent on the characterization of an individual's separation from the uniformed service, or “character of service.” 38 U.S.C. 4304. The general requirement is that the individual's service separation be under other than dishonorable conditions. Proposed section 1002.135 lists four grounds for terminating the individual's reemployment rights based on character of service: (i) Dishonorable or bad conduct discharge; (ii) “other than honorable” discharge as characterized by the regulations of the appropriate service Secretary; (iii) dismissal of a commissioned officer by general court-martial or Presidential order during a war (10 U.S.C. 1161(a)); and, (iv) removal of a commissioned officer from the rolls because of unauthorized absence from duty or imprisonment by a civil authority (10 U.S.C. 1161(b)). 38 U.S.C. 4304(1)-(4). The uniformed services determine the individual's character of service, which is referenced on Defense Department Form 214. For USERRA purposes, Reservists who do not receive character of service certificates are considered honorably separated; many short-term tours of duty do not result in an official separation or the issuance of a Form 214.

Proposed sections 1002.137 and 1002.138 address the consequences of a subsequent upgrading of an individual's disqualifying discharge. Upgrades may be either retroactive or prospective in effect. An upgrade with retroactive effect may reinstate the individual's reemployment rights provided he or she otherwise meets the Act's eligibility criteria, including having made timely application for reinstatement. However, a retroactive upgrade does not restore entitlement to the back pay and benefits attributable to the time period between the individual's discharge and the upgrade.

Employer Statutory Defenses

USERRA provides three statutory defenses with which an employer may defend against a claim for USERRA benefits. The employer bears the burden of proving any of these defenses. 38 U.S.C. 4312(d)(2)(A)-(C).

An employer is not required to reemploy a returning service member if the employer's circumstances have so changed as to make such reemployment impossible or unreasonable. 38 U.S.C. 4312(d)(1)(A). In view of USERRA's remedial purposes, this exception must be narrowly construed. The employer bears the burden of proving that changed circumstances make it impossible or unreasonable to reemploy the returning veteran. 38 U.S.C. 4312(d)(2)(A); proposed section 1002.139. The change must be in the pre-service employer's circumstances, as distinguished from the circumstances of its employees. For example, the defense of changed circumstances is available where reemployment would require the creation of a “useless job or mandate reinstatement where there has been a reduction in the workforce that reasonably would have included the veteran.” H.R. Rep. No. 103-65, at 25 (1993), citing
Watkins Motor Lines
v.
De Galliford,
167 F.2d 274, 275 (5th Cir. 1948);
Davis
v.
Halifax County School System,
508 F. Supp. 966, 969 (E.D. N.C. 1981). However, an employer cannot establish that it is unreasonable or impossible to reinstate the returning service member solely by showing that no opening exists at the time of the reemployment application or that another person was hired to fill the position vacated by the veteran, even if reemploying the service member would require terminating the employment of the replacement employee.
See Davis
at 968;
see also Cole
v.
Swint,
961 F.2d 58, 60 (5th Cir. 1992);
Fitz
v.
Bd. of Education of Port Huron Area Schools,
662 F. Supp. 1011, 1015 (E.D. Mich. 1985),
aff'd,
802 F.2d 457 (6th Cir. 1986);
Anthony
v.
Basic American Foods, Inc.,
600 F. Supp. 352, 357 (N.D. Cal. 1984);
Goggin
v.
Lincoln St. Louis,
702 F.2d 698, 709 (8th Cir. 1983).
Id.

An employer is also not required to reemploy a returning service member if such reemployment would impose an undue hardship on the employer. 38 U.S.C. 4312(d)(1)(B). As explained in USERRA's legislative history, this defense only applies where a person is not qualified for a position due to disability or other bona fide reason, after reasonable efforts have been made by the employer to help the person become qualified. H.R. Rep. No. 103-65, at 25 (1993). USERRA defines “undue hardship” as actions taken by the employer requiring significant difficulty or expense when considered in light of the factors set out in 38 U.S.C. 4303(15). USERRA defines “reasonable efforts” as “actions, including training provided by an employer, that do not place an undue hardship on the employer.” 38 U.S.C. 4303(10). USERRA defines “qualified”

in this context to mean having the ability to perform the essential tasks of the position. 38 U.S.C. 4303(9). These definitions are set forth in proposed sections 1002.5(m) (“undue hardship”), 1002.5(h) (“reasonable efforts”), and 1002.5(g) (“qualified”).

The third statutory defense against reemployment requires the employer to establish that “the employment from which the person leaves to serve in the uniformed services is for a brief, nonrecurrent period and there is no reasonable expectation that such employment will continue indefinitely or for a significant period.” 38 U.S.C. 4312(d)(1)(C), (2)(C). USERRA does not define “significant period.” Under both USERRA and its predecessor, the VRRA, a person holding a seasonal job may have reemployment rights if there was a reasonable expectation that the job would be available at the next season.
See, e.g., Stevens
v.
Tennessee Valley Authority,
687 F.2d 158, 161-62 (6th Cir. 1982),
and cases cited therein;
S. Rep. No. 103-158, at 46-47.

Subpart D—Rights, Benefits, and Obligations of Persons Absent From Employment Due to Service in the Uniformed Services

Furlough or Leave of Absence

Proposed section 1002.149 implements section 4316(b) of the Act, which establishes the employee's general non-seniority based rights and benefits while he or she is absent from the employment position due to military service. 38 U.S.C. 4316(b). The employer is required to treat the employee as if he or she is on furlough or leave of absence. 38 U.S.C. 4316(b)(1)(A). The employee is entitled to non-seniority employment rights and benefits that are available to any other employee “having similar seniority, status, and pay who [is] on furlough or leave of absence. * * *” 38 U.S.C. 4316(b)(1)(B). These non-seniority rights and benefits may be provided “under a contract, agreement, policy, practice, or plan in effect at the commencement of such service or established while such person performs such service.”
Id.
For example, if the employer offers continued life insurance coverage, holiday pay, bonuses, or other non-seniority benefits to its employees on furlough or leave of absence, the employer must also offer the service member similar benefits during the time he or she is absent from work due to military service. If the employer has more than one kind of non-military leave and varies the level and type of benefits provided according to the type of leave used, the comparison should be made with the employer's most generous form of comparable leave.
See Waltermyer
v.
Aluminum Company of America,
804 F.2d 821 (3d Cir. 1986); H.R. Rep. No. 103-65, Part I, at 33-34 (1993);
Schmauch
v.
Honda of America Manufacturing, Inc.,
295 F. Supp. 2d 823 at 836-839 (S.D. Ohio 2003) (employer improperly treated jury duty more favorably than military leave). The returning employee is entitled not only to the non-seniority rights and benefits of workplace agreements, policies, and practices in effect at the time he or she began the period of military service, but also to those that came into effect during the period of service. The Department invites comments as to whether this interpretation best effectuates the purpose of section 4316(b). Reference should be made to 38 U.S.C. 4316(a) and proposed sections 1002.210 through 1002.214 for the provisions addressing seniority-based rights and benefits.

The Department also interprets section 4316(b) of the Act to mean that an employee who is absent from a position of employment by reason of service is not entitled to greater benefits than would be generally provided to a similarly situated employee on non-military furlough or leave of absence.
See
Sen. Rep. No. 103-158 (1993) at 58. The Department also does not interpret the second use of the term “seniority” in section 4316(b)(1)(B) as a limiting factor in determining what non-seniority rights must be provided to the service member during the absence from the employment position. The Department invites comments as to whether this interpretation best effectuates the purpose of this provision.
See
proposed section 1002.149.

Proposed section 1002.152 addresses the circumstances under which an employee waives entitlement to non-seniority based rights and benefits. Section 4316(b)(2) of the Act provides that an employee who “knowingly” states in writing that he or she will not return to the employment position after a tour of duty will lose certain rights and benefits that are not determined by seniority. 38 U.S.C. 4316(b)(2). The Department intends for principles of Federal common law pertaining to a waiver of interest to apply in determining whether such notice is effective in any given case.
See Melton
v.
Melton,
324 F.3d 941, 945 (7th Cir. 2003);
Smith
v.
Amedisys, Inc.,
298 F.3d 434, 443 (5th Cir. 2002). By contrast, a notice given under 38 U.S.C. 4316(b)(2) does not waive the employee's reemployment rights or seniority-based rights and benefits upon reemployment. The Department invites comments as to whether this interpretation best effectuates the purpose of this provision.

Proposed section 1002.153 clarifies that an employer may not require the employee to use his or her accrued leave to cover any part of the period during which the employee is absent due to military service. 38 U.S.C. 4316(d). The employee must be permitted upon request to use any accrued vacation, annual or similar leave with pay during the period of service. The employer may require the employee to request permission to use such accrued leave. However, sick leave is not comparable to vacation, annual or similar types of leave; entitlement to sick leave is conditioned on the employee (or a family member) suffering an illness or receiving medical care. An employee is therefore not entitled to use accrued sick leave solely to continue his or her civilian pay during a period of service.

Health Plan Coverage

Section 4317 of the Act provides that service members who leave work to perform military service have the right to elect to continue their existing employer-based health plan coverage for a period of time while in the military. Section 4317 also requires that the employee and eligible dependents must, upon reemployment of the service member, be reinstated in the employer's health plan without a waiting period or exclusion that would not have been imposed had coverage not been suspended or terminated due to service in the uniformed services. The employee need not elect to continue health plan coverage during a period of uniformed service in order to be entitled to reinstatement in the plan upon reemployment. Section 4317 of USERRA is the exclusive source in USERRA of service members' rights with respect to the health plan coverage they receive in connection with their employment. Section 4317 therefore controls the entitlement of a person to coverage under a health plan, and supersedes more general provisions of the Act dealing with rights and benefits of service members who are absent from employment.
See
38 U.S.C. 4316(b)(5).

Under USERRA, the term “employer” is defined broadly to cover entities, such as insurance companies or third party plan administrators, to which employer responsibilities such as administering employee benefit plans or deciding benefit claims have been delegated. “Health plan” is defined to include an insurance policy or contract, medical or hospital service agreement, membership or subscription contract, or other arrangement under which health

services for individuals are provided, or the expenses of such services are paid. Proposed Section 1002.5(d); 38 U.S.C. 4303(7). However, because USERRA's continuation coverage provisions only apply to health coverage that is provided in connection with a position of employment, coverage obtained by an individual through a professional association, club or other organization would not be governed by USERRA, nor would health coverage obtained under another family member's policy or separately obtained by an individual.

USERRA's health plan provisions are similar but not identical to the continuation of health coverage provisions added to Federal law by the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). As with COBRA, the Act permits the continuation of employment-based coverage. Unlike COBRA, USERRA's continuation coverage is available without regard to either the size of the employer's workforce or to whether the employer is a government entity.

Proposed section 1002.164 addresses the length of time the service member is entitled to continuing health plan coverage. Section 4317(a)(1) provides that the maximum period of continued coverage is either 18 months or the period of military service (beginning on the date the absence begins and ending on the day after the service member fails to apply for reemployment), whichever occurs first.

Under section 4317(a)(2), implemented by proposed section 1002.166, a service member who elects to continue employer-provided health plan coverage may be required to pay no more than 102 percent of the full premium (the employee's share plus the employer's share) for such coverage, except that service members who perform service for fewer than 31 days may not be required to pay more than the employee share, if any, for such coverage. The amount of the full premium is determined in the same manner as for COBRA under section 4980B(f)(4) of the Internal Revenue Code of 1986. 26 U.S.C. 4980B(f)(4). The legislative history of USERRA indicates that the purpose of these provisions, and in particular the requirement that service members pay only the employee share for coverage during service lasting fewer than 31 days, is to ensure that there is no gap in health insurance coverage for the service member's family during a short period of service. Dependents of Reserve Component members are entitled to participate in the military health care system, called TRICARE, only if the period of service exceeds 30 days.
See
H.R. Rep. No. 103-65, Pt. 1, at 34 (1993).

USERRA does not require that any particular type of health plan coverage be provided. The statute requires only that the employer, and hence the plan, permit the service member to continue the coverage that he or she already has obtained through the employment relationship, including family and dependent coverage. USERRA does not provide specific guidance regarding how or within what time period the continuing coverage is to be elected. Proposed section 1002.165 provides that plan administrators and fiduciaries may develop reasonable requirements and operating procedures for the election of continuing coverage, consistent with the Act and the terms of the plan. Such procedures must take into consideration the requirement in USERRA section 4312(b) that where military necessity prevents the service member from giving the employer notice that he or she is leaving for military duty, or where giving such notice would be impossible or unreasonable, plan requirements may not be imposed to deny the service member continuation coverage.

The Department invites comments as to whether this approach—allowing health plan administrators latitude to develop reasonable requirements for employees to elect continuation coverage—best effectuates the purpose of the statute. Alternatively, the Department requests comments on the question whether these USERRA regulations should establish a date certain by which time continuing health plan coverage must be elected. Moreover, should a service member be permitted to delay electing continuation health plan coverage under some circumstances? Finally, in a case where health plan coverage was terminated or suspended by reason of military service, if the employee is permitted to delay reinstatement to the health plan for a period of time after the date of reemployment, the Department invites comments as to whether such delayed reinstatement coverage should be subject to an exclusion or waiting period.
See
38 U.S.C. 4317(b)(1).

As with every other right and benefit guaranteed by USERRA, the employer is free to provide continuation health plan coverage that exceeds that which is required by the Act. For example, some employers do not require the service member to pay more than the ordinary employee premium for continuation health coverage during an extended period of service in the uniformed services.

Proposed sections 1002.167-1002.168 explain the rights of a reemployed service member whose health plan coverage has been terminated as a result of his or her failure to elect continuation coverage, or length of service. At the time of reemployment, no exclusion or waiting period may be imposed where one would not have been imposed if the coverage of the service member had not terminated as a result of service in the uniformed services. This provision also applies to the coverage of any other person who is covered under the service member's policy, such as a dependent. Injuries or illnesses determined by the Secretary of Veterans' Affairs to have been incurred or aggravated during service are excluded from the ban on exclusions and waiting periods; however, the service member and any dependents must be reinstated as to all other medical conditions covered by the plan.

USERRA provides for the continuation of health coverage available to the service member in connection with his or her employment, so, generally, if the employer cancels health coverage for its employees while the service member is performing service, or if the employer goes out of business, the service member's coverage terminates also. Under USERRA, the treatment of multiemployer health plans provides an exception to this result. Special rules for multiemployer plans are the focus of proposed section 1002.169. This provision requires continued health plan coverage in a multiemployer plan even when the service member's employer no longer exists, or no longer participates in the plan. Any liability under the multiemployer plan for employer contributions and benefits under USERRA is to be allocated as the sponsor maintaining the plan provides. If the sponsor does not provide for an allocation of responsibility under these circumstances, the liability is allocated to the last employer employing the person before the period of uniformed service. Where that employer is no longer functional, the liability is allocated to the plan.

Subpart E—Reemployment Rights and Benefits

Prompt Reemployment

One of the stated purposes of USERRA is “to minimize the disruption to the lives of persons performing service in the uniformed services * * * by providing for [their] prompt reemployment.” 38 U.S.C. 4301(2). Section 4313 requires that a returning service member who meets the

eligibility requirements of section 4312 be “promptly reemployed” in the appropriate position. 38 U.S.C. 4313(a). The circumstances of each individual case will determine the meaning of “prompt.”
See
H.R. Rep. No. 103-65, Part I, at 32 (1993); S. Rep. No. 103-158, at 54 (1993). Proposed section 1002.181 provides guidance for the “prompt” reinstatement of returning service members. The regulation states, as a general rule, that the employer shall reinstate the employee as soon as practicable under the circumstances. Reinstatement must occur within two weeks after he or she applies for reemployment “absent unusual circumstances.” The reasonableness of any delay depends on a variety of factors, including, for example, the length of the service member's absence or intervening changes in the circumstances of the employer's business. An employer does not have the right to delay or deny reemployment because the employer filled the service member's pre-service position and no comparable position is vacant, or because a hiring freeze is in effect. The Department invites comments as to whether allowing the employer two weeks to reemploy the service member returning from a period of service of more than thirty days best effectuates the purpose of this provision of USERRA. [Note: If the period of service is less than 31 days then the statute requires that the returning employee simply report back to work; these regulations anticipate that such a person will be immediately reemployed.]

Reemployment Position

In construing an early precursor statute to USERRA, the Selective Training and Service Act of 1940, 50 U.S.C. Appendix, 308(b, c), the Supreme Court recognized a basic principle embedded in early protections provided for veterans, which was to become a bedrock concept of all future similar legislation. Thus, in
Fishgold
v.
Sullivan Drydock and Repair Corp.,
328 U.S. 275, 284-85 (1946), the Supreme Court stated that the returning service member “does not step back on the seniority escalator at the point he stepped off. He steps back on at the precise point he would have occupied had he kept his position continuously during the war.”
Id. Fishgold
principally involved the issue of a veteran's seniority; however, the principle applies with equal force to all aspects of the service member's return to the work force. The returning service member therefore should be restored to “a position which, on the moving escalator of terms and conditions affecting that particular [pre-service] employment, would be comparable to the position which he would have held if he had remained continuously in his civilian employment.”
Oakley
v.
Louisville & Nashville R.R.,
338 U.S. 278, 283 (1949). The position to which the returning service member should be restored has become known as the “escalator position.” The requirement that the service member be reemployed in the escalator position is implemented in section 4313 of USERRA. 38 U.S.C. 4313.

Proposed sections 1002.191 and 1002.192 implement general principles related to a returning veteran's right to reemployment in this escalator position. Proposed sections 1002.193 and 1002.195 clarify that seniority, status, pay, length of service, and service-related disability may affect the service member's reemployment position. Proposed sections 1002.196 and 1002.197 explain the employer's obligations to reemploy the service member based on the duration of the person's absence from the work place. Proposed section 1002.198 describes the criteria to be followed by the employer in making reasonable efforts to enable the service member to qualify for the reemployment position. Finally, proposed section 1002.199 provides guidance for employers in determining the priority of two or more service members who are eligible for the same employment position.

In some workplaces, where opportunities for promotion are conditioned upon the employee passing a skills test or examination, determining the escalator position will require administering a makeup promotional exam. If a reemployed service member was eligible to take such a promotional exam and missed it while performing military service, the employer should provide the employee with an opportunity to take the missed exam after a reasonable period of time to acclimate to the employment position.
See,

e.g.
,
Fink
v.
City of New York,
129 F.Supp.2d 511 (2001). In some cases, success on a promotional exam entitles an employee to an immediate promotion, and in some cases it entitles an employee only to a particular placement on an eligibility list. If the reemployed employee is successful on the makeup exam, and there is a reasonable certainty that, given the results of that exam, the reemployed employee would have been promoted during the time he or she was in military service, then the reemployed employee's promotion must be made effective as of the date it would have occurred had the employment not been interrupted by military service. Similarly, if the reemployed employee is successful on the makeup exam, and there is a reasonable certainty that, given the results of that exam, the reemployed employee would have been placed in a particular position on an eligibility list during the time he or she was in military service, then the reemployed employee's placement on the list must be made effective as of the date it would have occurred had the employment not been interrupted by military service. This requirement is similar to the requirement in Section 1002.236, that obliges an employer to give a reemployed employee, after a reasonable amount of time to adjust to the reemployment position, a missed skills test or examination that is the basis of a merit pay increase. Proposed section 1002.193 implements these requirements. The Department invites comments as to whether this interpretation best effectuates the purpose of this provision, or whether the issue of promotional exams requires more detailed treatment in these regulations.

The Department understands the statutory term “qualify” in 38 U.S.C. 4313 to include the employer's affirmative obligation to make reasonable efforts to assist the returning employee in acquiring the ability to perform the essential tasks of the reemployment position. This understanding is reflected in the language used in the regulations. The Department requests comments on whether this interpretation is proper.

The statute makes the duration of a returning employee's period of service a critical factor in determining the reemployment position to which the employee is entitled upon return from service. After service of 90 days or less, the person is entitled to reinstatement in the position of employment in which he or she would have been employed if not for the interruption in employment due to uniformed service (the escalator position). 38 U.S.C. 4313(a)(1)(A). The employer must make reasonable efforts to assist the individual in becoming qualified for the reemployment position. In the event the returning employee cannot become qualified for the escalator position despite reasonable efforts by the employer, the returning employee is entitled to the employment position in which he or she was employed on the date that the period of service commenced. 38 U.S.C. 4313(a)(1)(B). These requirements are implemented in proposed section 1002.196.

The service member returning from a period of service longer than 90 days is

similarly entitled to reemployment in the escalator position, but, at the employer's option, may also be reinstated in any position for which the employee is qualified with the same seniority, status, and pay as the escalator position. 38 U.S.C. 4313(a)(2)(A). This statutory option is intended to provide the employer with a degree of flexibility in meeting its reemployment obligations. As with an employee returning from a shorter period of service, the employer must first make reasonable efforts to qualify the individual for the escalator position or for the position of like seniority, status, and pay. In the event the returning employee cannot become qualified for one of these positions despite reasonable employer efforts, the person is entitled to the employment position in which he or she was employed on the date that the period of service commenced, or a position of like seniority, status, and pay. 38 U.S.C. 4313(a)(2)(B). These requirements are implemented in proposed section 1002.197.

In some instances, the service member may not be able to qualify for either the escalator position or the pre-service position (or a position similar in seniority, status, and pay to either of these positions) despite reasonable employer efforts. In such an event, the employee is entitled to be reemployed in any other position that is the nearest approximation to the escalator position. If there is no such position for which the returning service member is qualified, he or she is entitled to reemployment in any other position that is the nearest approximation to the preservice position. In either event, the returning service member must be reemployed with full seniority. 38 U.S.C. 4313(a)(4). This requirement is implemented by proposed sections 1002.196(c) and .197(c).

Depending on the circumstances, section 4313 either permits or requires the employer to reemploy a returning service member in a position with equivalent (or the nearest approximation to “equivalent”) seniority, status and pay to the escalator or pre-service position. 38 U.S.C. 4313(a)(2)(A), (B), (3)(A), (B). Although “seniority” and “pay” are generally well-understood terms, USERRA does not define “status” as it is used in section 4313 of the Act. Case law interpreting VRRA, a precursor to USERRA, recognized status as encompassing a broader array of rights than either seniority or pay. Job status varies from position to position, but generally refers to the incidents or attributes attached to, and inherent in, a particular job. The term often includes the rank or responsibility of the position, its duties, location, working conditions, and the pay and seniority rights attached to the position.
See
H.R. Rep. No. 103-65, Part I, at p. 31 (1993). Examples of status may be the exclusive right to a sales territory; the opportunity to advance in a position; eligibility for possible election to a position with the employee representative organization; greater availability of work where piece rates apply; the opportunity to work additional hours and to advance in a job; the opportunity to withdraw from a union; the opportunity to obtain a license; or, the opportunity to work a particular shift. The facts and circumstances surrounding the position determine whether a specific attribute is part of the position's status for USERRA purposes. Proposed sections 1002.193 and .194 implement these provisions of the Act.

Notwithstanding the escalator principle, USERRA does not require an employer to reinstate a returning service member in an employment position if he or she is not qualified to perform the civilian job. See proposed section 1002.198. USERRA defines “qualified” as “having the ability to perform the essential tasks of the position.” 38 U.S.C. 4303(9). An individual's performance qualifications are a function of his or her ability to perform the “essential tasks” of the employment position. This regulation provides guidelines for determining whether a given task is essential for proper performance of the position. In general, whether a task is essential for a position will depend on its relationship to the actual performance requirements of the position rather than, for example, the criteria enumerated in a job description. An employer may not decline to rehire a returning service member simply because he or she is unable to do some auxiliary, but nonessential, parts of the job. The Department invites comments as to whether this interpretation best effectuates the purpose of this provision.

Proposed section 1002.198 describes the employer's obligation to assist a returning service member for civilian reemployment in becoming qualified for a civilian position. USERRA requires the employer to make reasonable efforts to enable the returning service member to qualify for a position that he or she would be entitled to if qualified. Section 4303(10) defines “reasonable efforts” as “actions, including training provided by an employer, that do not place an undue hardship on the employer.” 38 U.S.C. 4303(10). Section 4303(15) defines “undue hardship” as “actions [taken by an employer] requiring significant difficulty or expense, when considered in light of * * * the overall financial resources of the employer” and several other stated factors. 38 U.S.C. 4303(15). Depending upon an employer's size and resources, a given level of effort might be an undue hardship for one employer and yet reasonable for another. The employer has the burden of proving that the training, retraining, or other efforts to enable the returning employee to qualify would impose an undue hardship. The proposed regulation describes the criteria that apply in determining whether the steps for aiding the service member in becoming qualified impose an undue hardship on the employer.

Proposed section 1002.199 implements section 4313(b), which governs the priority of reemploying two (or more) service members who are entitled to reemployment in the same position. 38 U.S.C. 4313(b). The individual who first vacated the employment position for military service has the highest priority for reemployment. 38 U.S.C. 4313(b)(1). If this priority means another returning service member is denied reemployment in that position, the USERRA rules that give reemployment options to the employer would govern the reemployment of the second person. Thus, the second service member is entitled to “any other position” offering status and pay similar to the denied position according to the statutory rules generally applicable to returning service members. 38 U.S.C. 4313(b)(2)(A). A disabled service member in this situation would be entitled to any other position offering status and pay similar to the denied position according to the rules governing disabled service members. 38 U.S.C. 4313(b)(2)(B).

Seniority Rights and Benefits

Section 4316(a) provides that a reemployed service member is entitled to “the seniority and other rights and benefits determined by seniority” that the service member had attained as of the date he or she entered the service, together with the additional seniority he or she would have attained if continuously employed during the period of service. 38 U.S.C. 4316(a). As with the principles governing the determination of the reemployment position, this provision reflects the escalator principle. As applied to seniority rights under section 4316(a), the escalator principle entitles the returning service member to the “same seniority and other rights and benefits determined by seniority that [the service member] would have attained if [his or

her] employment had not been interrupted by service in the uniformed services.” S. Rep. No. 103-158, at 57 (1993);
see also
H.R. Rep. No. 103-65, Part I, at 33 (1993). Proposed section 1002.210 states the basic escalator principle as it applies to seniority and seniority-based rights and benefits. It bears emphasis here that the escalator principle is outcome-neutral in terms of the effect of restoring the service member's seniority. For example, the application of the principle does not offer protection against adverse job consequences that result from placing the service member in his or her proper position on the seniority escalator. Finally, this section explains that the rights and benefits protected by USERRA upon reemployment include those provided by employers and those required by statute, such as the right to leave under the Family and Medical Leave Act of 1993, 29 U.S.C. 2601-2654 (FMLA). Accordingly, a reemployed service member would be eligible for FMLA leave if the number of months and the number of hours of work for which the service member was employed by the civilian employer, together with the number of months and number of hours of work for which the service member would have been employed by the civilian employer during the period of military service, meet FMLA's eligibility requirements.
See
Memorandum of July 22, 2002,
Protection of Uniformed Service Member's Rights to Family and Medical Leave
at
http://www.dol.gov/vets/media/fmlarights.pdf.

Proposed section 1002.211 makes clear that section 4316(a) is not a statutory mandate to impose seniority systems on employers. Rather, USERRA requires only that those employers who provide benefits based on seniority restore the returning service member to his or her proper place on the seniority ladder.

Proposed section 1002.212 adopts the basic definition of seniority-based rights and benefits developed in Supreme Court decisions. This definition imposes two requirements: first, the benefit must be provided as a reward for length of service rather than a form of short-term compensation for services rendered; second, the service member's receipt of the benefit, but for his or her absence due to service, must have been reasonably certain.
See Coffy
v.
Republic Steel Corp.,
447 U.S. 191 (1980);
Alabama Power Co.
v.
Davis,
431 U.S. 581 (1977);
see also
S. Rep. No. 103-158, at 57 (1993), citing with approval
Goggin
v.
Lincoln, St. Louis,
702 F.2d 698, 701 (8th Cir. 1983) (summarizing Supreme Court formulation of two-part definition of “perquisites of seniority”). Proposed section 1002.212(c) adds a third consideration which derives from another Supreme Court decision,
McKinney
v.
Missouri-Kansas-Texas R.R. Co.,
357 U.S. 265 (1958). In that case, the Court allowed consideration of the employer's “actual practice” in making advancement an automatic benefit based on seniority under the collective bargaining agreement. Accordingly, proposed section 1002.212(c) adds the requirement that “actual custom or practice” in conferring or withholding a benefit also determines whether the benefit is a perquisite of seniority.

Proposed section 1002.213 further defines one aspect of seniority-based rights and benefits: the requirement that receipt of the benefit be “reasonably certain.” The proposed regulation describes a “reasonably certain” likelihood as a “high probability” that the returning service member would have obtained the seniority-based benefit if continuously employed. A “high probability” is less than an “absolute certainty,” which the Supreme Court has rejected in analyzing the degree of probability a reemployed service member must satisfy in order to establish that his or her advancement would have been “reasonably certain” but for the period of service.
See Tilton
v.
Missouri Pacific Railroad Co.,
376 U.S. 169, 180 (1964). The employer may not deny a reemployed service member seniority-based rights or benefits based on a scenario of unlikely events that allegedly would have occurred during the period of service.

Proposed section 1002.214 emphasizes that the returning employee is also entitled to claim perquisites of seniority that first became available to co-workers or that were modified while he or she was in the service. That the employer did not offer the particular benefit until after the individual began the service is not a justification for denying the benefit to the returning service member. Similarly, if a benefit is modified or eliminated, the change would affect the returning service member. This requirement flows from the fact that the returning service member must be restored to the seniority rights and benefits that he or she would have attained with reasonable certainty if he or she had remained continuously employed during the period of service.

Disabled Employees

USERRA imposes additional requirements in circumstances involving the reemployment of a disabled service member. A disabled service member is entitled, to the same extent as any other individual, to the escalator position he or she would have attained but for military service. If the disability is not an impediment to the service member's qualifications for the escalator position, then the disabling condition is irrelevant for USERRA purposes. If the disability limits the service member's ability to perform the job, however, the statute imposes a duty on the employer to make reasonable efforts to accommodate the disability. 38 U.S.C. 4313(a)(3). In some instances, an employer is unable to accommodate a service member's disability despite reasonable efforts. If, despite the employer's reasonable efforts to accommodate the disability, the returning disabled service member cannot become qualified for his or her escalator position, that person is entitled to be reemployed “in any other position which is equivalent in seniority, status, and pay, the duties of which the person is qualified to perform or would become qualified to perform with reasonable efforts by the employer.” 38 U.S.C. 4313(a)(3)(A). If no such position exists, the service member is entitled to reemployment “in a position which is the nearest approximation * * * in terms of seniority, status, and pay consistent with circumstances of such person's case.” 38 U.S.C. 4313(a)(3)(B).
See, e.g., Hembree
v.
Georgia Power Co.,
637 F.2d 423 (5th Cir. 1981);
Blake
v.
City of Columbus,
605 F. Supp. 567 (S.D. Ohio 1984).

Proposed section 1002.225 sets forth the priority of reemployment positions for which the disabled service member should be considered. The regulation also implements the statutory requirement for reasonable accommodation of the returning service member's disability. Such accommodations may include placing the reemployed person in an alternate position, on “light duty” status; modifying technology or equipment used in the job position; revising work practices; or, shifting job functions. The appropriate level of accommodation depends on the nature of the service member's disability, the requirements for properly performing the job, and any other circumstances surrounding the particular situation.
See
38 U.S.C. 4303(9), (10), and (15); 4313(a)(3); H.R. Rep. No. 103-65, at 31 (1993); S. Rep. No. 103-158, at 53 (1993).

The employer must make reasonable accommodations for any disability incurred in, or aggravated during, a period of service. The accommodation requirement is not limited to disabilities

incurred during training or combat, so long as they are incurred during the period of service. Any disability that is incurred or aggravated outside of a period of service (including a disability incurred between the end of the period of service and the date of reemployment) is not covered as a service-related disability for USERRA purposes. The disability must have been incurred or aggravated when the service member applies for reemployment, even if it has not yet been detected. If the disability is discovered after the service member resumes work and it interferes with his or her job performance, then the reinstatement process should be restarted under USERRA's disability provisions.

A returning service member may have rights under USERRA based on a service-related disability that is not permanent. A service member who incurs a temporary disability may be entitled to interim reemployment in an alternate position provided he or she is qualified for the position and the disability will not affect his or her ability to perform the job. If no such alternate position exists, the disabled service member would be entitled to reinstatement under a “sick leave” or “light duty” status until he or she completely recovers.

In identifying an alternate position for a disabled service member, the focus should be on the returning service member's ability to perform the essential duties of the job. The position must be one that the person can safely perform without unreasonable risk to the person or fellow employees. The disabled service member is required to provide information on his or her education and experience, the extent of the disability, and his or her present capabilities. The employer then has the duty to disclose all positions that the service member may be qualified to perform. Because the employer has greater knowledge of the various positions and their requirements in the organization, the employer, and not the service member, is exclusively responsible for accommodating the disability by identifying suitable positions within the service member's abilities and capabilities. Proposed sections 1002.225 and .226 implement USERRA's requirements regarding disabled employees.

Rate of Pay

The escalator principle also determines the returning service member's rate of pay after an absence from the workplace due to military service. As with respect to benefits and the reemployment position, the application of this fundamental principle with respect to pay is intended to restore the returning service member to the employment position that he or she would have occupied but for the interruption in employment occasioned by military service.
See generally Fishgold
v.
Sullivan Drydock and Repair Corp.
Proposed section 1002.236 implements the escalator principle for purposes of determining the reemployed service member's rate of pay. The regulation also addresses the various elements of compensation that often compose the returning service member's “rate of pay.” Depending on the particular position, the rate of pay may include more than the basic salary. The regulation lists various types of compensation that may factor into determining the employee's overall compensation package under the escalator principle. The list is not exclusive; any compensation, in whatever form, that the employee would have received with reasonable certainty if he or she had remained continuously employed should be considered an element of compensation. The returning employee's rate of pay may therefore include pay increases, differentials, step increases, merit increases, periodic increases, or performance bonuses.

In some workplaces, merit pay increases are conditioned upon the employee passing a skills or performance evaluation. The employer should allow a reasonable period of time for the employee to become acclimated in the escalator position before such an evaluation is administered. In order that the employee not be penalized financially for his or her military service, the employee must be reemployed at the higher rate of pay, assuming that it is reasonably certain that the employee would otherwise have attained the merit pay increase during the period of military service. This requirement is similar to the requirement in Section 1002.193, which obliges an employer to give a reemployed employee, after a reasonable amount of time to adjust to the reemployment position, a missed skills test or examination that is the basis of an opportunity for promotion. The Department invites comments as to whether this interpretation best effectuates the purpose of this provision, or whether the issue of merit pay requires more detailed treatment in these regulations.

What is critical is not how the employer characterizes the compensation, but whether it would have been attained with reasonable certainty if not for the service in the uniformed services. In determining rate of pay, as in other situations, application of the escalator principle may leave the returning service member with less than he or she had before performing service. Thus, if nondiscriminatory adverse changes in the employment position's pay structure would with reasonable certainty have lowered the compensation rate during the period of service if he or she had remained continuously employed, the escalator principle may operate to diminish the returning service member's pay.

Protection Against Discharge

Section 4316(c) of USERRA provides service members special protection from discharge from civilian employment after returning from uniformed service. If the individual served over 180 days before reemployment, then he or she may not be discharged from the employment position within one year after reemployment except for cause. 38 U.S.C. 4316(c)(1). If the individual served between 31 and 180 days in the military, he or she may not be discharged from the employment position within 180 days after reemployment except for cause. 38 U.S.C. 4316(c)(2). A reinstated service member whose duration of service lasted 30 days or less has no similar protection from discharge; however, the individual is protected by USERRA's anti-discrimination provisions, 38 U.S.C. 4311, as explained in proposed sections 1002.18-.23. Proposed section 1002.247 elaborates the general rules for protection against discharge based on the duration of service prior to reemployment.

Prohibiting a reemployed service member's discharge, except for cause, ensures that the service member has a reasonable amount of time to get accustomed to the employment position after a significant absence. A period of readjustment may be especially warranted if the service member has assumed a new employment position after the military service. The discharge protection also guards against an employer's bad faith or
pro forma
reinstatement followed by an unjustified termination of the reemployed service member. Moreover, the time period for special protection does not start until the service member has been fully reemployed and any benefits to which the employee is entitled have been restored. Even assuming the service member receives the benefit of the full protection period prior to dismissal, an employer nevertheless violates the Act if the reason for discharging the service member is impermissible under USERRA.

Section 4316(c) does not provide complete protection from discharge to a reemployed service member for the duration of the protected period. An employer may dismiss a reemployed service member even during the protected period for just cause. Depending on the circumstances of the specific case, just cause may include unacceptable or unprofessional public behavior, incompetent or inefficient performance of duties, or criminal acts. An employer may also discharge the service member for cause if the application of the escalator principle results in a legitimate layoff or in the elimination of the job position itself, provided the person would have faced the same consequences had he or she remained continuously employed. Proposed section 1002.248 provides general guidelines for establishing just cause to discharge a reemployed service member during the protection period, and places the burden of proof on the employer to demonstrate that it is reasonable to discharge the person.
See
H.R. Rep. No. 103-65, Pt. 1, at 35 (1993); S. Rep. No. 103-158, at 63 (1993).

Pension Plan Benefits

USERRA establishes specific rights for reemployed service members in their employee pension benefit plans; the Act's specific provisions for pension benefit plans supersede general provisions elsewhere in the statute. 38 U.S.C. 4316(b)(6). The Act defines an employee pension benefit plan in the same way that the term is defined under the Employee Retirement Income Security Act of 1974 (ERISA).
See
29 U.S.C. Chapter 18; 38 U.S.C. 4318(a). The term “employee pension benefit plan” includes any plan, fund or program established or maintained by an employer or by an employee organization, or by both, that provides retirement income or results in the deferral of income for a period of time extending to or beyond the termination of the employment covered by the plan. Profit sharing and stock bonus plans that meet this test are included. USERRA provides that once the service member is reemployed according to the statute, he or she is treated as not having a break in service with the employer or employers maintaining the plan even though the service member was away from work performing military service.

Proposed sections 1002.259 to .267 describe the types of employee pension benefit plans that come within the Act and the pension benefits that must be provided to reemployed service members. Although USERRA relies on the ERISA definition of an employee pension benefit plan, some plans excluded from ERISA coverage may be subject to USERRA. For example, USERRA (but not ERISA) extends coverage to plans sponsored by religious organizations and plans established under State or Federal law for governmental employees. Benefits paid pursuant to federally legislated programs such as Social Security or the Railroad Retirement Act, however, are not covered by USERRA. USERRA coverage also does not include benefits under the Thrift Savings Plan (TSP); the rights of reemployed service members to benefits under the TSP are governed by another Federal statute.
See
5 U.S.C. 8432b. 38 U.S.C. 4318(a)(1)(B).

As proposed sections 1002.259 to .267 illustrate, each period of uniformed service is treated as an uninterrupted period of employment with the employer(s) maintaining the pension plan in determining eligibility for participation in the plan, the non-forfeitability of accrued benefits, and the accrual of service credits, contributions and elective deferrals (as defined in section 402(g)(3) of the Internal Revenue Code of 1986 (IRC)) under the plan. 38 U.S.C. 4318(a)(2)(B). As a result, for purposes of calculating these pension benefits, or for making contributions or deferrals to the plan, the reemployed service member is treated as though he or she had remained continuously employed for pension purposes.

Proposed sections 1002.261 and 1002.262 clarify who must make the contribution and/or deferral attributable to a particular period of military service and the timeframes within which payments are to be made to the plan. The employer who reemploys the service member is responsible for funding any employer contribution to the plan to provide the benefits described in the Act and the regulation. 38 U.S.C. 4318(b)(1). Some plans do not require or permit employer contributions. In that case, the plan is funded by employee contributions or elective deferrals. Other plans provide that the employer will match a certain portion of the employee contribution or deferral. If employer contributions are contingent on employee contributions or elective deferrals, such as where the employer matches all or a portion of the employee deferral or contribution, the reemployed service member is entitled to the employer contribution only to the extent that he or she makes the employee contributions or elective deferrals to the plan. 38 U.S.C. 4318(b)(2). A reemployed service member has the right to make his or her contributions or elective deferrals, but is not required to do so. Elective deferrals can be made up only to the extent that the employee has compensation from the employer that can be deferred. Proposed section 1002.262 provides that, if an individual cannot make up missed contributions as an elective deferral because he or she does not have enough compensation from the employer to defer (for example, if the individual is no longer employed by the employer), the plan must provide an equivalent opportunity for the individual to receive the maximum employer matching contributions that were available under the plan during the period of uniform service through a match of after-tax contributions.

USERRA is silent with respect to the amount of time allowed the employer to pay to the plan the contributions attributable to a reemployed service member's period of military service. It is the view of the Department that employer contributions to a pension plan that are not contingent on employee contributions or elective deferrals must be made no later than thirty days after the date of the person's reemployment. Interested parties are requested to comment on this proposed requirement, implemented in proposed section 1002.262. Specifically, the Department requests public comment on whether the proposed thirty-day period is too long or too short.

Where pension benefits are derived from employee contributions or elective deferrals, or from a combination of employee contributions or elective deferrals and matching employer contributions, the reemployed service member may make his or her contributions or deferrals during a time period starting with the date of reemployment and continuing for up to three times the length of the employee's immediate past period of military service, with the repayment period not to exceed five years. 38 U.S.C. 4318(b)(2); proposed section 1002.262. No payment by the service member may exceed the amount that would have been required or permitted during the period of time had the service member remained continuously employed. 38 U.S.C. 4318(b)(2). Any permitted or required amount of employee contributions or elective deferrals would be adjusted for any employee contributions or elective deferrals made to the plan during the employee's period of service. Any employer contributions that are contingent on employee contributions or elective deferrals must be made according to the plan's requirements for employer matching contributions. The Department also invites comments as to whether this interpretation best

effectuates the purpose of this provision.

USERRA does not specify whether the returning service member is entitled to partial credit in return for making up part (but not all) of the missed employee contributions or elective deferrals, but it does not require that the employee make up the full amount. Given that returning service members often face financial hardships on their return to civilian employment, and in view of the remedial purposes of USERRA, the Department interprets the Act to permit the employee to partially make up missed employee contributions (including required employee contributions to a defined benefit plan) or elective deferrals. In such a situation, the employer is required to make any contributions that are contingent on employee make-up contributions or elective deferrals only to the extent that the employee makes such partial contributions or elective deferrals.
See
proposed section 1002.262. For example, in a plan where the employee may or must contribute from zero to five percent of his or her compensation, and receive a commensurate employer match, the reemployed service member must be permitted to partially make up a missed contribution and receive the employer match. Where contributions from all employees are handled in a similar, consistent fashion under the plan, either the plan documents or the normal, established practices of the plan control the disposition of partial contributions or elective deferrals.

Under proposed section 1002.264, if the service member has withdrawn his or her account balance from the employee pension benefit plan prior to entering military service, he or she must be allowed to repay the withdrawn amounts upon reemployment. The amount to be repaid also includes any interest that would have been earned had the monies not been withdrawn. Repayment entitles the individual to appropriate credit in the plan. The reemployed service member may make his or her contributions or deferrals during a time period starting with the date of reemployment and continuing for up to three times the length of the employee's immediate past period of military service, with the repayment period not to exceed five years; during the time period provided by 26 U.S.C. 411(a)(7)(C) (if applicable); or within such longer time period as may be agreed to between the employer and service member. Proposed section 1002.264 applies to defined benefit plans and defined contribution plans. The Department invites comments on whether or how this section should apply to defined contribution plans.

Section 4318(b)(3) describes the method for calculating the reemployed service member's compensation for the period of military service to determine the amount the employer and service member must contribute under the plan. 38 U.S.C. 4318(b)(3). Proposed section 1002.267 provides that the compensation rate the reemployed service member would have earned had he or she remained continuously employed provides the usual benchmark. If that rate cannot be determined with reasonable certainty (for example, where the rate varies based on commissions or tips), the compensation rate may be based on the service member's average compensation rate during the 12-month period before the service period. For an employee who worked fewer than 12 months before entering the service, the entire employment period just prior to the service period may be used.

The employer must allocate its contribution on behalf of the employee in the same manner as contributions made for other employees during the period of the service member's service were allocated. However, under proposed section 1002.265, the employer is not required to allocate accrued earnings and forfeitures to the reemployed service member. 38 U.S.C. 4318(b)(1).

Special rules apply to multiemployer plans. 38 U.S.C. 4318(b)(1). Proposed section 1002.266 focuses on the operation of multiemployer plans. ERISA defines the term “multiemployer plan” as a plan to which more than one employer is required to contribute; which is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer; and, which satisfies regulations prescribed by the Secretary of Labor. 29 U.S.C. 1002(37). An individual's period of uniformed service that qualifies as employment for purposes of section 4318(a)(2) is also employment under the terms of the pension benefit plan; any applicable collective bargaining agreement under 29 U.S.C. 1145; or, any similar Federal or State law requiring employers who contribute to multiemployer plans to make contributions as specified in plan documents.

With a multiemployer plan, a service member does not have to be reemployed by the same employer for whom he or she worked prior to the period of service in order to be reinstated in the pension plan. As long as the employer is a contributing employer to the plan, the service member is entitled to be treated as though he or she experienced no break in service under the plan. Proposed section 1002.266 describes the allocation of the employer's obligation to fund employer contributions for reemployed service members participating in multiemployer plans. Initially, the benefits liability is to be allocated as specified by the sponsor maintaining the plan. 38 U.S.C. 4318(b)(1)(A). Both of the bargaining parties, usually the union(s) and the employers, and the plan trustees of a multiemployer plan are sponsors of the plan. The initial allocation by the plan sponsor(s) is likely to vary from plan to plan. For purposes of USERRA, if the plan documents make no provision to allocate the obligation to contribute, then the individual's last employer before the service period is liable for the employer contributions. In the event that entity no longer exists or functions, the plan must nevertheless provide coverage to the service member. 38 U.S.C. 4318(b)(1)(B).

By authorizing the plan sponsors to designate how the contribution is to be paid, Congress intended to give employers, employee organizations and plan trustees (all of whom are plan sponsors) flexibility in structuring the payment obligation to suit the plan's particular circumstances. “The Committee intends that multiemployer pension plan trustees or bargaining parties should be able to adopt uniform standard rules under which another employer, such as the last employer for which the individual worked before going into the uniformed service or the employer for which the returning service member had the most service during a given period following release from the uniformed service, may be considered the ‘reemploying' employer for purposes of the pension provisions of Chapter 43. The Committee also intends for multi-employer pension plan trustees to have the right to determine that it would be more appropriate not to make any individual employer liable for such costs and thus to be able to adopt rules under which returning service members' reconstructed benefits would be funded out of plan contributions and other assets without imposing a specific additional funding obligation on any one employer.” S. Rep. No. 103-158, at 65 (1993). With respect to both multiemployer and single employer plans, however, the Committee indicated: “It is the intent of the Committee that, with respect to allocations to individual account plans under section 3(34) of ERISA,

allocations to the accounts of returning service members not be accomplished by reducing the account balances of other plan participants.”
Id.

If an employer participating in a multiemployer plan reemploys an individual who is entitled to pension benefits attributable to military service, then the employer must notify the plan administrator of the reemployment within 30 days. 38 U.S.C. 4318(c). USERRA requires this notice because multiemployer plan administrators may not be aware that a contributing employer has reemployed a person who may have a pension claim arising from his or her military service. In contrast, administrators of single employer pension plans are more likely to have access to such information. This notification requirement is implemented by proposed section 1002.266.

Although a service member who is not reemployed under the Act would not be entitled to pension benefits for his or her period of service, any vested accrued benefit in the plan to which the service member was entitled prior to entering military service would remain intact whether or not he or she was reemployed. Joint Explanatory Statement on H.R. 995, 103-353, at 2507 (1994); H.R. Rep. No. 103-65, Part I, at 36-37 (1993). The terms of the plan document control the manner and timing of distributions of vested accrued benefits from the plan if the service member is not reemployed by a participant employer.

USERRA provides specific guidance on certain aspects of the reemployed service member's pension plan rights. At the same time, employers, fiduciaries and plan administrators must also comply with other laws that regulate plan administration but are beyond the scope of these proposed regulations. Federal and State laws governing the establishment and operation of pension plans, such as ERISA or the Internal Revenue Code of 1986, as amended, and the regulations of the Pension Benefit Guaranty Corporation, continue to apply in the context of providing benefits under USERRA. Thus, for example, while section 4318(b)(1)(A) provides that liability for funding multiemployer pension plan benefits for a reemployed service member shall be allocated as the plan sponsor specifies, laws other than USERRA govern the technical aspects of the allocation.

Subpart F—Compliance Assistance, Enforcement and Remedies

Compliance Assistance

USERRA authorizes the Secretary of Labor to provide assistance to any person regarding the employment and reemployment rights and benefits provided under the statute. 38 U.S.C. 4321. The Secretary acts through the Veterans' Employment and Training Service (VETS). USERRA promotes the resolution of complaints without resort to litigation. In order to facilitate this process, section 4321 allows VETS to request assistance from other Federal and State agencies and volunteers engaged in similar or related activities. Proposed section 1002.277 describes VETS' authority to provide assistance to both employees and employers. VETS' assistance is not contingent upon the filing of a USERRA complaint.

Investigation and Referral

Proposed section 1002.288 implements section 4322, which authorizes VETS to enforce an individual's USERRA rights. Any person claiming rights or benefits under USERRA may file a complaint with VETS if his or her employer fails or refuses to comply with the provisions of USERRA, or indicates that it will not comply in the future. 38 U.S.C. 4322(a). This avenue, however, is optional. Nothing in section 4322 requires an individual to file a complaint with VETS, to request assistance from VETS, or to await notification from VETS of the right to bring an enforcement action.
Palmatier
v.
Michigan Dept. of State Police,
981 F. Supp. 529 (W.D. Mich. 1997). Invoking VETS' enforcement authority is an alternative provided by the statute once an employee decides to file a USERRA complaint.
See Gagnon
v.
Sprint Corp.,
284 F.3d 839, 854 (8th Cir. 2002). Alternatively, the individual may file a complaint directly in the appropriate United States District Court or State court in cases involving a private sector or State employer, respectively (or the Merit Systems Protection Board in cases involving a Federal executive agency).
See
38 U.S.C. 4323(b) (direct action against State or private employer); 38 U.S.C. 4324(b) (direct action against Federal executive agency).
See
proposed sections 1002.288 and 1002.303. The Office of Personnel Management has issued a separate body of regulations that implement USERRA for employees of Federal executive agencies.
See
5 CFR Part 353.

Proposed section 1002.288 also implements the statutory criteria for the form of a complaint. 38 U.S.C. 4322(b). Any complaint submitted to VETS must be in writing, using VETS Form 1010, which may be found at
http://www.dol.gov/libraryforms/forms/vets/vets-1010.pdf.
The proposed regulation also contains the procedures for processing a complaint. VETS provides technical assistance to a potential claimant upon request, and his or her employer if appropriate. 38 U.S.C. 4322(c). Technical assistance is not limited to filing a complaint; it also includes responding to requests for information on specific issues that are not yet part of a formal USERRA complaint. Once an individual files a complaint, VETS must conduct an investigation. If the agency determines that a violation of USERRA has occurred, VETS undertakes “reasonable efforts” to effectuate compliance by the employer (or other entity) with its USERRA obligations. Proposed section 1002.289-.290; 38 U.S.C. 4322(d). VETS notifies the claimant of the outcome of the investigation and the claimant's right to request that VETS refer the case to the Attorney General).
See
38 U.S.C. 4322(e), 4323.

Section 1002.289 sets forth VETS' authority to use subpoenas in connection with USERRA investigations. VETS may (i) require by subpoena the attendance and testimony of witnesses and the production of documents relating to any matter under investigation; and (ii) enforce the subpoena by requesting the Attorney General to apply to a district court for an appropriate order. 38 U.S.C. 4326(a)-(b). VETS' subpoena authority does not apply to the judicial or legislative branch of the Federal Government. 38 U.S.C. 4326(d).

Enforcement of Rights and Benefits Against a State or Private Employer

Section 4323 establishes the procedures for enforcing USERRA rights against a State or private employer. “State” includes the several States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, the Virgin Islands, and other territories of the United States. 38 U.S.C. 4303(14). The political subdivisions of a State (counties, municipalities and school districts), however, are private employers for enforcement purposes. 38 U.S.C. 4323(j). Although USERRA does not define “private employer,” the term includes all employers other than the Federal Government or a State. Proposed sections 1002.303 to .314 implement section 4323 of the Act.

An aggrieved individual may initiate a USERRA action either by filing an action in court or by filing a complaint with VETS. If a complaint is filed with VETS and voluntary compliance cannot be achieved, the claimant may request VETS to refer the complaint to the Attorney General. 38 U.S.C. 4323(a)(1). If the Attorney General considers the complaint meritorious, the Attorney

General may represent the claimant and file a complaint in the appropriate U.S. district court. In cases where representation is provided by the Attorney General, the complainant is the plaintiff if the case is brought against a private employer, including a political subdivision of a State; however, if the complaint involves a State employer, it is brought in the name of the United States. A claimant may also proceed directly to the courts in the following circumstances: (i) The claimant foregoes informal resolution by VETS; (ii) the claimant declines referral of the complaint to the Attorney General after an unsuccessful informal resolution; or, (iii) the Attorney General refuses to represent the claimant after referral. 38 U.S.C. 4323(a)(2). Proposed sections 1002.303 and .304 implement these provisions.

Section 4323 establishes requirements for several aspects of the judicial process involving USERRA complaints, which are explained in proposed sections 1002.305 through 1002.311. The United States district courts have jurisdiction over actions against a State or private employer brought by the United States, and actions against a private employer by a person. For actions brought by a person against a State, the action may be brought in a State court of competent jurisdiction. 38 U.S.C. 4323(b); proposed section 1002.305. Venue for an action between the United States and a State lies in any Federal district in which the State exercises authority or carries out functions. Venue for an action against a private employer lies in any Federal district in which the employer maintains a place of business. 38 U.S.C. 4323(c); proposed section 1002.307. Only persons claiming rights or benefits under USERRA (or the United States acting on their behalf) have standing to initiate a USERRA action. 38 U.S.C. 4323(f). Proposed section 1002.308 therefore prohibits employers or other entities (such as pension plans or unions) from initiating actions.
See
H.R. Rep. No. 103-65, at 39 (1993). As for the respondents necessary to maintain an action, the statute requires only the employer or prospective employer to be named as necessary parties. 38 U.S.C. 4323(g);
see
H.R. Rep. No. 103-65, at 39 (1993). Proposed section 1002.309 implements this restriction.

No fees or court costs may be imposed on the claimant. In addition, a prevailing claimant may recover his or her attorney's fee, expert witness fee, and other litigation expenses. 38 U.S.C. 4323(h); proposed section 1002.310.

No State statute of limitations applies to a USERRA proceeding. 38 U.S.C. 4323(i). Proposed section 1002.311 provides that an unreasonable delay by the claimant in asserting his or her rights that causes prejudice to the employer may result in dismissal of the claim under the doctrine of
laches.

See
H.R. Rep. No. 103-65, at 39 (1994). The legislative history relies in part on a Sixth Circuit decision, which held that any limitation upon a former employee's right to sue is derived from the equitable doctrine of
laches
rather than an analogous State statute of limitations.
See Stevens
v.
Tennessee Valley Authority,
712 F.2d 1047, 1049 (6th Cir. 1983) (decided under the predecessor Veterans' Reemployment Rights Act).

The Department has long taken the position that no Federal statute of limitations applied to actions under USERRA. USERRA's provision that State statutes of limitations are inapplicable, together with USERRA's legislative history, show that the Congress intended that the only time-related defense that may be asserted in defending against a USERRA claim is the equitable doctrine of
laches.
38 U.S.C. 4323(i);
see
S. Rep. No. 103-158, at 70 (1993); H.R. Rep. No. 103-65, at 39. Recently, a Federal district court ruled that USERRA claims are subject to a four-year statute of limitations enacted prior to the enactment of USERRA that imposes a general limitations period for all Federal causes of action where no statute of limitations is “otherwise provided by law,” 28 U.S.C. 1658.
Rogers
v.
City of San Antonio,
No. Civ. A. SA-99-CA-1110, 2003 WL 1566502 (W.D. Tex. Mar. 4, 2003). The
Rogers
decision is on appeal to the Fifth Circuit Court of Appeals.
City of San Antonio
v.
Rogers,
No. 03-50588 (5th Cir.) Another recent district court decision,
Akhdary
v.
City of Chattanooga,
No. 1:01-CV-106, 2002 WL 32060140 (E.D. Tenn. May 22, 2002), held that 28 U.S.C. 1658 does not apply to USERRA claims. The recent decision of the United States Supreme Court in
Jones
v.
R. R. Donnelley & Sons Co.,
No. 02-1205, 2004 WL 936488 (U.S. May 3, 2004) is not dispositive because USERRA “otherwise provides by law” that no statute of limitations applies, and because, with respect to some USERRA claims, the cause of action previously existed under the VRRA and consequently predates the effective date of 28 U.S.C. 1658. The Department continues to believe that no statute of limitations applies to USERRA claims but invites comments on the validity of this view in light of the conflicting court decisions.

With respect to remedies, the court has broad authority to protect the rights and benefits of persons covered by USERRA. The court may order the employer to comply with USERRA's provisions; compensate the claimant for lost wages and/or benefits; and pay additional, liquidated, damages equivalent to the lost wages/benefits if it determines that the employer's violation is willful. 38 U.S.C. 4323(d)(1). The legislative history establishes that “a violation shall be considered to be willful if the employer or potential employer ‘either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the [provisions of this chapter].’ ” H.R. Rep. No. 103-65, at 38 (1994), quoting
Hazen Paper Co.
v.
Biggins,
507 U.S. 604, 617 (1993) (holding that a violation of the ADEA is willful if the employee either knew or showed reckless disregard for whether the statute prohibited its conduct). Proposed section 1002.312 lists the possible remedies allowed under section 4323(d). Proposed section 1002.313 states that compensation consisting of lost wages, benefits or liquidated damages derived from any action brought on behalf of the United States shall be paid directly to the aggrieved individual. Finally, the court may use its equity powers to enforce the rights guaranteed by USERRA. 38 U.S.C. 4323(e); proposed section 1002.314.

Effective Date and Compliance Deadlines

These regulations impose no new legal requirements but explain existing ones, in some cases for the first time. The Department proposes that these regulations be effective 30 days after publication of the final rule, and requests comment on whether this allows adequate time for covered parties to come into full compliance. We expect that most employers are currently in full compliance. However, to the extent that these regulations clarify USERRA's requirements and require adjustments in employer policies and practices, the Department wants to allow a reasonable amount of time for the transition to take place.

V. Procedural Determinations

A. Paperwork Reduction Act

This rule involves information collection, recordkeeping, or reporting requirements, as described in the chart below. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3501,
et seq.
), these requirements have been submitted to the Office of Management and Budget. Send comments regarding this burden or any other aspect of this collection of information, including

suggestions for reducing this burden, to: Office of Information and Regulatory Affairs (Attention: Katherine Astrich, Desk Officer for VETS), 725 17th St., NW., Washington, DC 20503. In addition to regular mail, OIRA will accept comments via electronic mail to
KAstrich@omb.eop.gov,
or by Fax at (202) 395-6974. Please include “Docket No. VETS-U-04” on the subject line of the email, fax or letter. Note that security-related problems may result in significant delays in receiving comments by regular mail. In addition, the Agency encourages commenters to submit their comments on the paperwork determination to VETS using the methods described above under
ADDRESSES
.

Comparison of Proposed and Statutory Language Containing Paperwork Requirements

Proposed provision and language
Statutory provision and language

1002.85(a) * * * You or an appropriate officer of the uniformed service in which your service is to be performed, must notify your employer that you intend to leave your employment position to perform service in the uniformed services. * * *
1002.85(c) Your notice to your employer may be either verbal or written.

4312(a)(1) [Reemployment rights and benefits available if] the person (or an appropriate officer of the uniformed service in which such service is performed) has given advance written or verbal notice of such service to such person's employer[.]

1002.115 * * * When you complete your service in the uniformed services, you must notify your pre-service employer of your intent to return to your employment position by either reporting to work or submitting a timely application for employment
1002.118 * * * You may apply either orally or in writing.

4312(a)(3) [Reemployment rights and benefits available if] the person reports to, or submits an application for reemployment to, such employer in accordance with the provisions of subsection (e).

1002.193 * * * Your employer must determine your seniority rights, status, and rate of pay as though you had been continuously employed during the period of service
4313(a)(2)(A)

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A04-20844. Public record. Not legal advice.